By Eric Savitz

UBS chip analyst Uche Orji has turned cautious on the memory sector. He says a recent rebound in DRAM ASPs is not likely to be sustainable, with slowing demand ahead, and increasing risk of some NAND capacity being flipped over to DRAM production. Orji also remains negative on the NAND flash market, “due to persistent excess supply.”

“While we continue to believe the DRAM industry should see further improvements in demand in [the second half], we also think the fragility and sustainability of the current DRAM sector recovery is once again in focus given concerns for further global macro economic slowing and the potential for NAND capacity conversion to DRAM,” he writes.

Orji launched coverage of Samsung today with a Sell rating; he also downgrades Qimonda (QI) to Neutral from Buy, and cut his target price to $2.70 from $5.70. The analyst trimmed his target on Buy-rated Micron (MU) to $8 from $9, and chopped his target on Neutral-rated SanDisk (SNDK) to $21 from $35.

For Micron, Orji cut his EPS estimate for the August 2008 fiscal year to a loss of $1.33, from a loss of $1.22. For ’09, he goes to a loss of 5 cents, from a profit of 14 cents. For SanDisk, his 2008 EPS estimate remains 98 cents, well below the Street consensus of $1.43. For 2009, he sees $1.44, well short of the Street at $1.81.

“Key themes for memory semiconductor through the second half of 2008 and into 2009 will include downside risks to PC unit demand from slowing global economic growth and fungibility of capacity between DRAM and NAND production lines at diversified memory vendors,” he wrote in a research note today.

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There are 19 comments

JULY 7, 2008 2:27 P.M.

Al wrote:

Brilliant analysis. For the last few months the piling on of downgrades by you so called analysts has taken place. Why don't you mention, in the case of Sandisk, that it's now trading below book value and it's a probably a great time to buy in! Oops, my fault, your a "don't forget about me" analyst.

JULY 7, 2008 2:35 P.M.

sndk wrote:

UBS is down 8% today and down from $62 to $18 during the last year. They should fix their own house before downgrading other companies...

Why should we beleieve them when their own company has been a disaster???

JULY 7, 2008 2:44 P.M.

WarrenB wrote:

The sell call should have been at the top of the cycle not the bottom .Now is the ime to buy!

JULY 7, 2008 4:07 P.M.

t cook wrote:

hell he left micron a buy and said he thinks it will hit 8

JULY 7, 2008 5:10 P.M.

whosthere? wrote:

Who the f*%k is Uche Orji, did he just wake up out of hibernation? These guys downgrade so they can buy cheap before the earnings come out. It's all about reverse psychology.

JULY 7, 2008 5:23 P.M.

Al wrote:

These analysts are like weather reporters, projecting rain on a cloudy day is easier than projecting the sun to break out. They'd rather be wrong on the rain than on the sun. If they'd just shut up on the cloudy day's I'd be happier. Of course they only make money for their firms by moving stocks, so they might as well go the easier negative route.

JULY 7, 2008 5:47 P.M.

Orji or Orgy wrote:

Oops, Maybe I am misspelling the name! Downgrading when Sandisk is at $18.43 seems overkill to me or trying to beat the dead.

JULY 7, 2008 6:06 P.M.

Octavio Tourinho wrote:

Mr. Orji´s track record as an analyst of the semiconductor industry and Micron in particular is not even in the top 10 (see for example finance.yahoo star analysts rating). There is no reason to pay much attention to his opinion.
In addition, UBS is a terrible investment bank, unable to manage its own investements and should not be giving unsolicited advice.

JULY 7, 2008 8:27 P.M.

John wrote:

For memories, the place to be is high margin specialty chips. GSI Technology (GSIT) reported 18th consecutive quarter of profitability, had steady sequential improvements throughout the year in three important metrics — net revenue, operating income, and net income. GSIT revenue growth in the March quarter was fueled primarily by their business with OEMs in Asia and U.S. distribution.

JULY 8, 2008 3:34 A.M.

Alex007 wrote:

He is late with his downgrades. Memory stocks are volatile and we are NOT at the top for the cycle. My 78-mom analyses (not taking about urine and blood) are much better compare to UBS “pro”!!!

JULY 8, 2008 5:08 A.M.

Big Boss wrote:

This guy(Orji)is a real piece
of work.You now know the "Crooks" are accumalating Sndk.

JULY 8, 2008 9:44 A.M.

Orji Porgy wrote:

= Worthless scum. DRAM stocks will treble in the next 6 months

JULY 8, 2008 11:18 A.M.

Martin wrote:

The analyst should be careful when assuming DRAM/NAND fungibility - switching fab capacity from one to another is not a simple flip of a switch.

JULY 8, 2008 8:57 P.M.

Uche Orji wrote:

How many times do we the "analysts" at the investment firms have to manipulate the system, get huge salaries to whore ourselves out, before you guys catch on?

-tech bubble
-housing market
-oil

Thanks for the $$$$$.

We hype the stocks after our large clients buy the stock. Then we tell our clients to sell before we trash the stocks until everyone gets out, then we tell our large corporate clients to buy the stock again. Repeat, wash hands...

JULY 8, 2008 11:04 P.M.

fu Uche wrote:

Dear Uche,

Why don't you concentrate on your own company (UBS) first before you go telling other companies how to run their business.

Last time I checked your company (UBS) had a 70.292 % decrease in the last 52 weeks!!!!

Are you freakin kidding me???

How can you sleep at night?

Oh I forgot the salaries you get for your 'analysis'.

God I hate you and your kind...

JULY 9, 2008 9:50 A.M.

Why wrote:

I can't take credit for this link found on the yahoo message board, but take a look who's been recently adding sndk shares as an institution ---- it's UBS!!!!! Plus their a major holder. If UBS doesn't like sndk, then why the hell aren't you dumping it from your holdings!!!!! Uche's motives are clear, don't you dare let him and UBS win, start buying!!!!!

Besides all those negative mentioned, there must be some positive sides. Unfortunately they are neglected so the so called analysts can induce their conclusion for these mentioned stocks. I am particular amazed about SANDISK where keeps relatively lean workforce yet can generate revenues to such scale. SANDISK's productiviy per employees would justify its position as a stock with rising potential.

JULY 12, 2008 7:50 A.M.

john wrote:

lets face it boys wall street is crooked. the economy is screwed because of these idiots.

AUGUST 2, 2008 3:25 P.M.

Memory Tracker wrote:

Qimonda is in the worst shape of the companies mentioned. It, along with Nanya and Inotera, uses the more costly trench process which involves making ever deeper bottle-shaped capacitors (now with square cross sections). It also gets more difficult to scale trench to smaller geometries. Qimonda, Nanya, and Inotera have higher costs than their counterparts. Desperate to reduce costs, Nanya has decided to partner with stack DRAM maker Micron. Qimonda has decided to partner with stack DRAM maker Elpida.

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Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.